A federal judge says the Trump administration did not consider environmental consequences of the controversial Keystone XL pipeline, dealing a setback for the Trump administration and a win for environmental groups.

Trump, a Republican, said the project would lower consumer fuel prices, create jobs and reduce USA dependence on foreign oil.

US Judge Brian Morris, of the District Court for the District of Montana, noted in his ruling that the administration had "simply discarded" climate change concerns in rushing to overturn former US President Barack Obama's 2015 permit denial for the TransCanada project.

Morris' ruling requires the Trump administration to conduct a more complete review of the potential environmental impacts of the pipeline.

"An agency can not simply disregard contrary or inconvenient factual determinations that it made in the past", Judge Morris said in his ruling.

The federal court order blocks a Trump administration permit for the construction of the pipeline.

"An appeal of this order will likely go to the 9th Circuit [appellate court], which has not been favorable ground for the Trump administration", he said.

TransCanada, which had been planning the pipeline for much of this decade, had planned to begin construction next year. "We have said our preference would be Canadian pipelines to Canadian tidewater, but at the same time this absolutely represents a number of jobs, we're fairly intertwined with the USA and Houston area, the refineries there".

In a 54-page order issued late Thursday, Judge Morris alleges the US Department of State committed multiple violations when it approved the construction of the $8 billion, 1,900-kilometer pipeline in 2017.

"The Trump administration tried to force this dirty pipeline project on the American people, but they can't ignore the threats it would pose to our clean water, our climate, and our communities".

Morris had ruled in August that the State Department had to reach a conclusion on the environmental impacts of the pipeline, but determined Thursday that the department's analysis had left out information he considered to be crucial.

Trump claimed there would be "great construction jobs" stemming from Keystone XL, which involves the building of a 1,200 mile pipeline across six USA states in order to bring crude oil from Alberta in Canada to refineries on the Gulf Coast.

The ruling is a major victory for environmentalist groups that sued to stop the project and for the Native American tribes that have protested against it for years.

Tom Goldtooth, executive director of the Indigenous Environmental Network, which was one of the plaintiffs asking for the injunction, said his group felt vindicated by the ruling.

The State Department could try to address the deficiencies the judge indicated in the ruling, appeal the decision to a higher court, or Congress could try to pass a law enabling the project's construction.

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